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on satellite's web access
Crafty pitch to gain open access to cable pipes
By David Everitt
If you’ve been keeping tabs on the broadband field, you’ve naturally heard about the return-path issue.
People say that satellite broadcasters are at a disadvantage here, that they’ve been slower than digital cable in developing high-speed link-ups both to and from the home.
Of course, we’ve heard this a great deal from the cable industry. The difference now is that we’re starting to hear it from a satellite broadcaster too.
Last month, EchoStar, the No. 2 DBS provider behind DirecTV, conceded that the satellite industry currently can’t compete with digital cable in the two-way broadband field.
The company recently began offering two-way high-speed service through its partner StarBand, but still, in comments filed with the FCC, EchoStar referred to the possible inconvenience of this service, pointing out that customers would have to buy and install a second dish to receive the StarBand connection.
A curious way to ballyhoo a new product, to say the least.
EchoStar also made a suggestion that begins to explain the reason for this stance. It suggested that it might make sense for the FCC to institute open access to digital cable lines to allow companies like EchoStar to become more competitive.
When contacted directly, EchoStar promotes a somewhat less severe depiction of its difficulties. As a matter of fact, spokesman Marc Lumpkin emphasizes that, despite the company’s FCC comments, the StarBand internet service is selling.
"It’s a great solution, particularly in areas that can’t receive any other internet access. There are about 50 million customers in that category." (Just for the record, according to the Carmel Group, that figure is closer to 30 million.)
So if the service is making inroads into the market, then why the less-than-optimistic comments to the FCC?
"What it comes down to," Lumpkin says, "is that we have no market power compared to cable. There are 67 million cable customers. EchoStar has 5 million."
As for the convenience issue, he points out that it is possible for a customer to have both the digital video and high-speed internet service incorporated into the same dish. But he also adds that this entails spending another $50 for installation, in addition to the $99 monthly fee.
Open access is a possible solution, Lumpkin says, but not one that EchoStar is demanding at this point.
"What we’re saying is, if the FCC opens up the cable lines to other companies, then we should have access too."
As you would expect, open access is not a thrilling prospect from the cable industry’s perspective. But cable operators aren’t likely to take exception to the idea that they have a more viable high-speed transmission vehicle.
Commenting on EchoStar’s FCC statement, National Cable Television Association spokesman David Beckwith says, "I find it amusing, since this is really 180 degrees different from their TV and radio ads. In their ads they say cable is outmoded, it’s an ancient technology, so you should switch to the more modern satellite operators. Meanwhile, they tell the FCC a different story. Their credibility now has to be questioned."
Beckwith makes a concession of his own: DBS providers have "a hell of a product" when it comes to supplying digital video and they’ve been able to achieve some impressive growth. "But still they can’t resist going to the FCC and saying there’s a need for regulation of their cable competitors to slow them down."
Impartial observers are scratching their heads a bit over EchoStar’s stance before the FCC. Jim Stroud, an analyst for the Carmel Group, points out that the StarBand service provides acceptable internet access, "not quite as fast as digital cable or DSL, but the speed is very good."
He also points out the upcoming upgrades from the Ku band satellite signal to the faster Ka band within the next couple of years, a development that should help both EchoStar and DirecTV.
"It’s a matter of time till they catch up to cable. So EchoStar’s comments are a little surprising."
Carmel president Jimmy Scheffler is also somewhat baffled by the whole thing. "When EchoStar says to its consumers it can’t compete, in a way it’s undermining its own broadband model."
Upon more reflection, he puts the EchoStar comments within the context of its fairly unorthodox reputation.
"It seems like a gamble," he says, "something you’d see first from EchoStar. I can’t see it coming from DirecTV."
Scheffler speculates that the DBS provider is concerned more with short-term tactics, that it looks upon open access as a way to seize upon a competitive option for the time being. He also thinks EchoStar might be looking beyond its identity as purely a satellite provider.
"If EchoStar looks upon itself as a provider of signals, regardless of platforms, if that’s their vision, then there’s no time like the present to get into cable transmission."
-David Everitt writes about television from Huntington, New York.
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